The report found that in 2016 selling prices in Munster for larger holdings - over 100 acres with a residence – fell by 20%, while those without a dwelling fell by 9%. For medium sized holdings – between 50-100 acres, the falls were 10% with a residence and 11% without. For small holdings, up to 50 acres, the falls were 4% and 3% respectively. (See table in Note to Editor)

Teagasc Economist Jason Loughrey said that depressed profitability from, beef, tillage and in particular dairy farming, were having a negative effect on land values.

“The fall in land values in Munster may represent a reaction to the drop in profitability on dairy farms in 2016 following two particularly high dairy income years in 2014 and 2015”.

“While cattle prices declined by between 5 and 8% and cereal prices fell 5%, milk prices declined by 9%. The fall in dairy prices in particular may explain why land rental rates and sales prices differed between Munster and the other regions. Depressed dairy farm incomes appear to have led to reduced demand for agricultural land with the magnitude of the price decline increasing in accordance with the size of the land area transacted” Loughrey said.

Leinster

The land sales market in Leinster fared better than in Munster in 2016. Prices for smaller transactions of less than 50 acres showed the largest increase, with average prices increasing by up to 6% relative to 2015. In the 50 to 100 acre and the over 100 acre categories in Leinster, the story was more mixed, with modest selling price increases of 1 to 2% recorded for transactions that did not include a residence.

The leasing market has noticeably decreased as land owners take advantage tax relief for long term leasing. One rural surveyor quoted in the report said that farmers prefer long term leases rather than the traditional conacre system as it gives them more flexibility and tenure for a fixed period.

Connaught/Ulster

The most positive land market developments in 2016 were reported in Connaught/Ulster where values increased across all land categories tracked in the survey. The largest increase reported in Connaught/Ulster was for transactions of less than 50 acres including a residence, where prices increased by 12%. For the other land categories in Connaught/Ulster value increases were in the range of 1 to 5%.

Commenting on the regional variation in the results, Edward McAuley, SCSI Regional Manager, pointed out that while the performance of the market in Connaught/Ulster contrasted with Leinster and Munster, it should be noted that average land prices in Connaught/Ulster remain below the average in the other two regions.

“Some surveyors attributed the price increases in Connaught/Ulster to the expansion of commercial forestry and believe this expansion is taking a substantial volume of some of the better agricultural land out of circulation. With generous tax free premiums available to landowners and investors, investment returns are likely to be substantially higher compared with livestock farming”.

The Future

McAuley said that 42% of Rural Agency Surveyors predict that agricultural land values will remain unchanged in 2017, with 23% predicting a modest 1 to 4% increase. He also noted that 40% percent of surveyors located in Leinster and Munster expect land values to increase in 2017 compared with a more negative outlook in the Connaught / Ulster region with only 14% signalling an increase in values.

“While Irish dairy farm incomes are expected to rebound in 2017, livestock prices are expected to decline while cereal prices will remain unchanged”

“Beyond commodity prices there are a range of other issues which will shape the future of the agricultural land market in Ireland. While the impact of Brexit may feature prominently as a concern for those contemplating activity in the land market, CAP reform and climate change policy also represent important considerations. Economic pressures within the farm sector will continue to point towards consolidation of smaller farms into larger units.”

Land Rental

The performance of the land rental market across the regions in 2016 was more uniform than the land sales market. Single digit percentage increases were recorded in Leinster for the renting of land suitable for grazing and silage. Rental prices for grazing and silage land were on average steady in Munster and Connaught/Ulster in 2016. Rental rates for cereal land increased in Leinster and Munster in 2016, but fell in Connaught/Ulster when compared with 2015 levels. While 34% of Chartered Surveyors expect the price of rented land to increase, 51% forecast no change.

This is the fourth in a series of annual reports on the state of the land market produces by the Society of Chartered Surveyors Ireland (SCSI) and the Agricultural Economic and Farm Surveys Department of Teagasc. The report brings together the respective expertise of both organisations to increase the range and quality of the data that is available on the agricultural land market in Ireland. The land price data is based on survey responses from SCSI members around the country and is supplemented by interviews conducted with a selection of SCSI members actively engaged in the agricultural land market. The fieldwork for the survey was conducted in February 2017.